deal architect

Analyst Cam: SAP Verticals – Aerospace & Defense

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Torsten Welte, Global VP and Head of Industrial Business Unit for Aerospace & Defense at SAP.

As you see in the image (and much more in the video ) below, the coverage is mammoth but as he says it's only the "guys that make the toys, not play with the toys". SAP's Travel and Transportation Group covers the airline operators, the Public Sector group covers space agencies like NASA and ESA, SAP's SuccessFactors and other units cover the human side of these large customers.

I tell him I am envious he gets to go to Paris, Farnborough and other airshows. The technology in modern spacecraft, avionics, eVTOLs and naval equipment he covers is drool-inducing and the design, manufacturing, monitoring, maintenance, earned value calculations, contract management have all evolved to keep up. Torsten talks about smart factories, digital twins, augmented reality, robotics, ML-enabled inspections and more as part of the solutions SAP and its ecosystem is delivering.

When we recorded the session, he was getting ready for the industry Innovation Day SAP hosts every year. This year it was in Huntington Beach, CA.

Torsten told me later they had “over 250 experts from the industry.  During the innovation days, the community comes together to network and exchange their best practices and learnings.  Our host company provides insights into their operations and innovations.  This year, Northrop Grumman was our host. Besides touring their facility, we got insights on the James Webb (telescope) project.  Truly an amazing innovation in technology and how it was launched in space.”

“Presenters showcased projects which tackled supply chain planning and manufacturing constraints.  It was all about visibility and operational improvements through digital. They showcased solutions to manage data to make the right decision to improve throughput, cost, optimize constraints, and stay flexible.

Very exciting to see SAP solutions helping the industry to not fly blind.”

Torsten does a really nice job covering all of that in half an hour.

Burning Platform – Even More Business as Unusual

In the 86th episode of Burning Platform, we host repeat guests, Peter Maier and Tilman Goettke of SAP. We discuss reaction to the book, Business as Unusual that Peter co-authored and both Tilman and I helped research and curate - link to the Amazon page via the badge on left.

Peter and Tilman discuss feedback about the book as they have handed out bunch of copies at book signings, podcasts and customer  events. Tilman says he is glad the book recognized only a few business executives have time or patience to read books from cover to cover. So the opening chapter has short, two page overviews of each of the 8 mega trends. The book also has "thought experiments" to engage readers. For example, what if a maker of coffee machines wants to evolve beyond selling machines to also offer coffee by the cup? What impact does that for financial streams and for sales and customer engagement? Pretty much everything changes when you try to change your business model and adopt the hot trend of "servitization".

The book offers similar opportunities to think about countless vertical applications for their companies which have emerged as a result of COVID, digital transformations, the Ukraine crisis and the climate change urgency.  Most of these are applications that we couldn't have imagined in 2019.

We also discuss new addressable markets in fast-growing emerging economies around the world. We cover the excitement and hype around Generative AI and low-code tools.    

It is nice to have Peter provide commentary in his new role around strategic customer engagements in the office of the CEO. He says amidst all this choice, customers expect very clear guidance from SAP and consistency from its massively expanded ecosystem (in the book, we included perspectives from strategy firms, Industry 4.0 robotics firms, SAP.iO Foundry startups and many others – see details in this post). He hears from customers their highest priority is their customers and their top line. He lists other customer expectations around sustainability, standardization, efficiency (especially in asset intensive sectors), vendor consolidation and related governance.  

Both say the pace of change has definitely accelerated. Peter points to the phenomenal pace of adoption of ChatGPT. He adds “all the more reason to get up early”. Tilman adds we need to acknowledge “what was science fiction yesterday is today's everyday business reality and the constraining factor is business agility”.

It truly is a thrill to have a strategic discussion with these two industry veterans at a vendor with so much industry and global depth. Enjoy this half an hour. So much change – so many new opportunities!!

I will also have a chance to share a session with Peter about the themes from the book at Sapphire in Orlando in a couple of weeks. Details to follow.

Analyst Cam: SAP Verticals - Semiconductor

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Jeff Howell, Global Vice President, Head of High-Tech Industry Business Unit at SAP.

We have all heard about the geopolitics and risks of continuing to be dependent on SE Asia for a steady supply of chips. We have heard about the chaos in the auto sector with the inadequate supply of that increasingly important component as vehicles get smarter and electrified.

Jeff takes us through a much more nuanced perspective on the complexity, the long lead times and capital intensity of the semiconductor sector. I was first introduced to him as I was helping SAP with research on the recently released Business as Unusual book (available on Amazon – click on badge on left)

Here are just a few excerpts from the conversation in the video below:

• The semiconductor industry amounts to 0.3% of the U.S. GDP, yet semiconductors are required to produce 12% of the U.S. national output. It is even more pronounced in Japan -  with impact on 30% of their national output
• If you and I decide to go into the chip making business we would need to come up with $10 to $15 billion and spend about two to three years building that production capability
• Over 400 chemicals are used in a combination of solids and gases to make those chips. Over a dozen noble gases on the periodic table are critical supplies
• Roughly 30% of the neon that's needed in the semiconductor industry comes from Ukraine
• 2 to 4 million gallons of ultra-pure water are required every day during the chip production process. Almost half of all the world's chips are manufactured in Southeast Asia. Well, a couple years ago, there were droughts in Southeast Asia  
• Every wafer produced in a typical fab generates two to three gigabytes of data and you multiply that by 24 wafers in a lot and 1000s of lots per day, it's very easy to come up with terabytes, and generate even petabytes of data every day.
• The little known fact is more than 80% of that data is never even looked at - not enough process engineers who can examine that data

He spends a fair amount of time talking about networks like Catena-X which is auto industry-centric but heavily depends on semiconductors. He cites use cases at companies like NVIDIA and Wolfspeed (a critical supplier of silicon carbide) and partners like PDF which helps companies analyze that mountain of operational data for better yields and other outcomes. He also discusses how SAP is blending financial and operational data for the sector.

It is a master class on critical components for so much of the economy and the unique systems the industry needs. Very nicely done in about half an hour – he could easily have gone much longer

Analyst Cam: SAP Verticals - Chemicals

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Matt Reymann, Global VP of the Chemicals Business Unit at SAP.  He provides an overview of SAP’s extensive work in the sector. Did you know 99 of the top 100 chemical companies run SAP? And that SAP's first customer 50 years ago was a chemical company, ICI. So, as Matt says “Chemicals are in SAP’s DNA… as technology has evolved, as our customers have evolved, we've evolved with the industry.”

Matt has example after example of innovations in the sector like molecular recycling. He shares use cases across the enterprise as in the graph below.

He also covers business model changes where as with complex industrial products, chemical companies are learning to sell their products and capabilities as a service. He also cites examples from the new SAP book, Business as Unusual.

Very nicely done in 30 minutes. His passion for the sector really shines through. And you get a really nice perspective on the macro trend in a sector which has an impact on most everything we use on a daily basis.

Burning Platform: The Best of Times, the Worst of Times

In the 85^th episode of Burning Platform, we host a repeat guest, Dion Hinchcliffe of Constellation Research. Dion is one of the most strategic industry analysts I know and he is always in tune with high level trends CIOs are factoring.

I invited him to present on the morphing world of IT services.  We discuss consolidation of providers we are seeing in many companies, near shoring and maturing of S American talent, value pricing in services, the major impact of low-code tools, the coming impact of generative AI like ChatGPT, the emergence of FinOps as CIOs re-balance public cloud loads and optimize hyperscaler budgets.

He is extremely positive - says we are at a plateau of IT productivity.

As I have written in the last few weeks I too am extremely optimistic about new application markets which have emerged as a result of shocks from COVID, the Ukraine energy crisis, digital transformations. From intelligent returns in retail to EV charging infrastructure management and billing in auto to servitization support in industrial markets to smart insurance using new risk analytics, I am tracking over a hundred vertical extensions that have become critical in the last couple of years. Also, my recent trip to India has opened my eyes to application opportunities in emerging economies which reflect their unique regulatory, language and business practice needs. Many more opportunities there.

What’s not to like?

Here’s the reality check. Somebody will have to write these new applications and support them. Service firms will happily custom write them for you but need to accept shrinking revenues from previous legacy relationships. They have resisted previous opportunities to automate their own operations and will face new pressures to do so. Customers can have their own domain experts use new low code and AI tools to write them. Many, however. have forgotten the art of building and supporting new applications. They have become better at buying applications and integrating them. But buy from whom? Many software vendors are cautious about vertical or global extensions and hope partners will write them on their platforms. Lots of wishful thinking.

Both Dion and I are optimists but it is clear new fortunes will be made and many others lost. As Charles Dickens famously wrote “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity ….”

As the recent book I helped SAP execs write, it is imperative you adopt a “Business as Unusual” mindset given the big changes afoot.

Enjoy our banter for a little over 20 minutes