'We do not want to be saying that next year we are coming out with R/4 and three years later the next one. It is not acceptable to our customers and we are not willing to do that' - Dr Peter Zencke, Executive Board Member, SAP AG

A member of the Executive Board of SAP AG, based in
Walldorf, Germany, Dr Peter Zencke guides key product development activities of SAP. A
doctorate in mathematics from the University of Bonn, Germany, and holding degrees in
economics and mathematics, Dr Zencke's contributions include supply chain management,
logistics execution and industry solutions for retail, oil and gas, and automotive. His
most recent achievement was in the area of customer relationship management called SAP
FOCUS. On his way back from Sapphire'98 at Melbourne, Dr Zencke announced in Mumbai some
key initiatives for the country. DATAQUEST caught up with him during his concluding hours
in the country's financial capital before he left for Germany. Excerpts of his perspective
on the future of the SAP product portfolio follow:

From a broad perspective, what are the changes taking
place in the SAP product portfolio?

Over the past few years, we have been evolving the base R/3 system to include emerging
business requirements. Two of these evolutions are in the form of SCOPE (Supply Chain
Optimization, Planning and Execution), the supply chain initiative and BIW (Business
information Warehouse), the business intelligence and decision support system. This year
we have added one more dimension, FOCUS (FOcus on CUStomers), a customer relationship
management initiative including marketing analysis and planning, order management and
service support. Taken together, the three dimensions present what SAP offers to the
modern business enterprise-helping organizations go beyond their borders, make effective
decisions, and manage customer relationships.

The FOCUS initiative that we recently added may be more
important than it may seem. FOCUS and SCOPE are closely related to each other in that they
deal with the value chain of the organization. Customer relationship management covers the
entire gamut of activities related to marketing, sales and services. Decision support for
marketing is a key aspect for success in competitive markets. Business-to-business
integration, integration with dealer and supplier networks helps information run
seamlessly across the chain. SAP aims to continuously innovate and offer products that
will help organizations achieve their business goals.

With Business Information Warehouse, aren't you trying
to woo the customer with a get-this-while-the-other-one-is-being-done offer? Have there
been any advantages?

All our new dimension products can run independently of R/3. But definitely with R/3
the integration is maximum. Hence easier. Customers are free to choose what they need. In
datawarehousing we are delivering content, the merit of which depends on how well you
configure your datawarehouse and integrate it with the transaction system. With BIW, all
the attributes used to configure a datawarehouse are directly integrated with the
underlying R/3 system. You don't have to do anything much to run your datawarehouse.

What has been the market acceptance of BIW?

We are currently in the rollout phase. Our major customers are extremely satisfied.
They like the ease of use of our system. Return on investment, overall visibility of
corporate data, both inside and outside the organization, ease of data extraction from R/3
system for end-users-these are what our customers liked best.

A buzzword today is the module or component-based
approach to ERP products. What is your view of this?

We have influenced the use of this term. We started using it two-and-a-half years ago
at the Vienna Sapphire event. Traditionally, the important functional areas addressed in
an ERP are financials, HR, logistics and distribution, and manufacturing. One parameter
which determines flexibility is the degree of centralization or decentralization possible.
If you take financials, it makes sense to transnational organizations to have one global
financial system. Whereas, for huge manufacturing organizations with facilities across the
globe, sometimes there is no choice but to run full-blown R/3 system per plant, though SAP
can support cross-plant MRP. Distribution organizations with retail focus might find it
better to have an independent distribution management system apart from the ERP that they
are using. These are some examples where an ERP or specific parts of an ERP needs to be
used differently in one way or the other. This is one aspect that is driving the
componentization of ERP.

The other aspect is the need for change management. In
financial systems, the pace of change may be lesser than say, the supply chain system. The
other way of saying this is that financial systems are generally more stable than many
other systems. When new functionality gets demonstrated by the vendor, the user needs to
be able to incorporate it without changing much in the base platform. Why should an
organization be made to upgrade its financial system every now and then when new
technology adaptation gets added on to the supply chain system? Componentization helps
achieve this.

Interestingly, there is also talk of decomponentization.
The term could be misleading, but what it means is that a company can achieve a level of
flexibility by using the manufacturing module from SAP, financials from Oracle and HR from
Peoplesoft. The danger here is in begetting a system that is loosely coupled and very
unstable and discontinuous.

Integration of ERP with product data management systems
has been traditionally a weak area. Does SAP consider it so and how do you plan to address
the issue?

I agree that there is an obvious lack of functionality. With PDM systems, the data models
and interface technology is too limited. And this is not only SAP's problem. PDMs have to
interface their data in two directions: with the CAD system and the ERP system. The data
models followed by the CAD vendors and the ERP vendors are different because one defines
the product and the other is transaction-oriented. PDM gets squeezed in between them. What
is missing is a mature open communication standard between the different data models. The
reality is that there is a problem today. We hope to set it right in the next two years at
least, if not by the next year.

What are the structural enhancements planned on the R/3
product system?

More correctly, it would be the developments that we plan for the SAP FOCUS
initiative. We need to enhance support for smaller machines in areas like mobile sales
applications or standalone applications for dealers on PCs. So what we need to support is
message-oriented replication in three-tier or multiple tier client-server architecture.
Organizations are getting more complex in their operations and relationships. Typically,
consider an organization with five manufacturing systems: one finance system, one HR
system, one datawarehouse, 20 corporate databases and more than 1,000 independent clients,
attempting to achieve reliable data transfer from salesmen's laptops on the field to the
corporate database for logging orders and connectivity back to ensure order fulfillment.
For such situations we need the technology to synchronize message-replicated data. The
integration is message-based and no longer database-based. Database synchronization
between different databases... different types of databases with different data structures
is increasingly needed in complex organizations. So the challenge that we are working on
is to achieve message-based synchronized transaction-based integration of massively
parallel systems.

Does all this qualify to become an R/4, your next
generation, possibly?

I would say that these are all stages of evolution for R/3. We have evolved R/3 to
reflect what a modern business enterprise needs. In the process, we have gone beyond the
realms of an ERP system. So it is an evolution of R/3 and both the R/3-based components
and New Dimension products can be used productively by customers without disruption and in
some cases without release migration. Our customer base will not accept any disruption in
business. We do not want to be saying that next year we are coming out with R/4 and three
years later the next one. It is not acceptable to our customers and we are not willing to
do that.