Emergence of on demand solutions in the context of enterprise services

Thomas Wieberneit27.09.2006

Emergence of SaaS - Reasons

It was about time, because SaaS offers very low entry barriers for customers

No licenses, no maintenance Departmental roll out; often no involvement of IT departments Quick fixes for pressurizing problems This holds especially true in the case of CRM

SaaS offers very low exit barriers for customers No large upfront investment done

Internet became a trusted and stable business platform after the burst of the .com bubble

Contenders meanwhile offer a wealth of functionality that is often not needed by customers, so they are looking for simpler solutions that are ‘good enough’

The Innovators Dilemma: Disruption from below

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Adapted from ‘The Innovators Dilemma’ by Clayton Christensen

Complexity of Functionality demanded by the markets

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Window of Opportunity

What is an Enterprise Service Architecture?

A service-oriented architecture is a collection of services that are built following few principles: Abstraction Modularization Loose coupling of modules Communication via well defined interfaces (services)

An Enterprise Services Architecture is the application of the service-oriented architecture principles to enterprise scale scenarios.

An Enterprise Service models business activities. It is an aggregation of Web Services to meet with the goal of automating enterprise-scale business scenarios. It typically accesses one or more enterprise information systems. Enterprise Services communicate using web service standards e.g., cancel order

Enterprise Services Architecture – Key Characteristics*

ESA extends the benefits of web services to business scenarios

Enterprise Services are modeled from outside in ESA offers a blueprint for enterprise-wide business

process evolution with complete investment protection Enterprise Services Architecture allows new business

processes to be developed, deployed, and changed independently of existing applications

Enterprise Service Architecture is about increasing companies’ flexibility while reducing cost. Easy recombination of core processes Easy outsourcing possibilities due to standard interfaces

*SAP Whitepaper Enterprise Services

Current Situation There is an ongoing commoditization of Enterprise

Applications Businesses need to keep their overall IT costs low Businesses faster and faster need to flexibly adapt their

processes in order to keep or gain competitive advantage Businesses see a good use in applying plain standards for

parts of their operations that do not distinguish them Main interest for on demand solutions can be observed in

HR/Hiring/Talent Management*

Corporate processes are good candidates for outsourcing

First on demand suites are existing E.g., Netsuite

*Merrill Lynch CIO Survey 2006 – 2008, 16.08.2006

Core and Context*

A process is Core, if it differentiates the company and gives competitive advantage. All other processes are Context.

*Adapted from ‘Living on the Fault Line’ by Geoffrey Moore

CoreDifferentiation

ContextProductivity

Mission CriticalActivities

EnablingActivities

Bringing it all together Companies with an increasing frequency of process

changes need to adopt their core processes and thus their IT structure often to keep their competitive advantages.

Companies need to reduce their (IT) operations cost. This can be achieved by standardizing and outsourcing of processes

SaaS promises to reduce operations cost by standardizing on (industry) standard processes (best practices)

ESA promises flexibility at low cost

Conclusion

SaaS and ESA will converge along context processes

Enabling processes will be the next wave of SaaS and be integrated into companies as a service followed by mission critical context processes

The systems of outsourcers and their customers will be increasingly connected via Enterprise Services

The same will hold true along the value chain of companies

Questions?

thomas.wieberneit@gmail.com

References

Clayton M. Christensen, The Innovator’s Dilemma, Collins Business Essentials, ISBN 0-06-052199-6

Geoffrey A. Moore, Living On The Fault Line, HarperCollins Publishers, ISBN 0-06-008676-9

Dan Woods, Enterprise Services Architecture, SAP Press, ISBN 3-89842-508-8

Merrill Lynch, July ’06 CIO Survey of software spending intentions

SAP, White Paper Enterprise Services