SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 1 On the Opportunities and Threats of e-Marketplaces Dr. Bernd-Uwe Pagel SVP Marketplaces SAP AG
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 1
On the Opportunities and Threats
of e-MarketplacesDr. Bernd-Uwe Pagel
SVP Marketplaces
SAP AG
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 2
Agenda
The Evolution of B2B Networks
E-Marketplaces @ SAP
Software Provisioning vs. Service Provisioning
Summary
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 3
Agenda
The Evolution of B2B Networks
E-Marketplaces @ SAP
Software Provisioning vs. Service Provisioning
Summary
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 4
SAP has 2,5 Years History ine-Marketplace Business
Foundation of Foundation of SAP MarketsSAP Markets, an , an SAP subsidiary SAP subsidiary to develop and to develop and
market solutions market solutions for e-for e-
MarketplacesMarketplaces
Announce-Announce-ment of the ment of the partnership partnership
between SAP between SAP Markets and Markets and
Commerce OneCommerce One
Delivery of Delivery of three versions of three versions of MarketSetMarketSet, the , the joint solution of joint solution of SAP Markets SAP Markets
and Commerce and Commerce OneOne
Reintegration Reintegration of SAP Markets of SAP Markets
into SAP and into SAP and Foundation of Foundation of the the Business Business
Unit Unit MarketplacesMarketplaces
SAP becomes a SAP becomes a member of the member of the
GTWAGTWA
March 2000 June 2000 Fall 2000 -Spring 2002
TodayApril 2002
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 5
SAP has Achieved a Strong Market Share
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 6
SAP Stays Committed
• e-Marketplaces will play a substantial role in the business strategy of SAP customers
• e-Marketplaces requires different engagements compared to the classical software business
• SAP has established a separate Business Unit focussing on e-Marketplaces only– Customer care and partner management– Solution development and support– Knowledge and skill sharing across all SAP e-Marketplaces
and their participants– Joint business development w/ successful customers
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 7
Key Success Factors of e-Marketplaces
Quick decision-making and little politics on Board level
Experienced, industry-networked management team with strong backing of investors
A value proposition which is sustainable and attractive for ALL Marketplace participants
Technology partnerships with long-term perspective and sufficient inhouse skills
Simple services and a focused offering, not “everything for all”
Governance
Execution
Business Model
Reliability
Focus
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 8
Agenda
The Evolution of B2B Networks
E-Marketplaces @ SAP
Software Provisioning vs. Service Provisioning
Summary
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 9
SAP Believes in Open B2B Networks and Supports their Evolution
•Build an open community of Exchanges– Interoperability governed by SLAs and contracts– Pooling of Services to lower cost– Faster ramp-up of ww transaction volume
•Deliver additional values to participants– Accelerating global roll-out of on-ramp solutions (e.g., e-
Procurement, Private Exchanges)– Enabling a global consolidation of the supplier base– Cost-efficient offering of value-added services (e.g., Supplier
Integration and Activation, Content Services)– Supporting global sourcing efforts (e.g., Global Spend Reporting)
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 10
Portals and Exchanges are Complementary
Private
Public
Pri
vacy
Integration IntensityInformationIntegration
ProcessIntegration
Portal Exchange
Collaboration Services betweeninternal operational companyunits
Process Integration Enablement(e.g., master data harmonization)
Intercompany ConnectivityServices (e.g., Document Routing,Mapping, Roundtrip Procurement)
Value Added Services (e.g. ASP, Sourcing, Financial andLogistics Services)
Company-internal end-user information Service
User Interface canconsolidate visibility andaccessibility of internalsystems
Community Knowledge and Content
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 11
Nature of Services and Complexity of the Eco-system are Controlling the Deployment Options
Public & PrivatePublic & Private
PrivatePrivate
Nature of Service
Complexity of Ecosystem
(External business partner relationships, product structure, corporation structure)
low highStandardized
Unique
PublicPublicStandardized
Products,Catalogue
Procurement
GIG Complex Corporation,Catalogue
Procurement
Shell
Complex Relationships,
Direct Procurement
eAEC(Scope, connectivity,
complexity, cross-industry,
strategic importance)
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 12
Creating B2B Portfolios
Content & DataManagement
Source: PwC Research and Ascet, 2002.
PublicPublic PrivatePrivate
Horizontal Horizontal e-MPe-MP
Vertical Vertical e-MPe-MP
PrivatePrivateExchangeExchange
Service Catagories
IT Integration
Community Content & Industry RegistryCommunity Content & Industry Registry
Customer Service and SupportCustomer Service and Support
Catalogs & Content Services (Non-strategic)Catalogs & Content Services (Non-strategic)
Catalogs & Content Services (Strategic)Catalogs & Content Services (Strategic)
eAnalytics (Performance Monitoring+Reporting)eAnalytics (Performance Monitoring+Reporting)
ContentMgmt
CRM
BI
B2B Transactional Integration/Mapping ServicesB2B Transactional Integration/Mapping Services
B2B Document Routing & Security ServicesB2B Document Routing & Security Services
B2B EDI VAN Replacement & Registry ServicesB2B EDI VAN Replacement & Registry Services
Middle-
ware
Settlement, Payment & ClearinghouseSettlement, Payment & Clearinghouse
Logistics & Transportation ServicesLogistics & Transportation Services
Supply Chain Event ManagementSupply Chain Event Management SCEM&
LogisticsFinancials
Collaborative Design & EngineeringCollaborative Design & Engineering
Supply Chain Collaboration (e.g. CPFR)Supply Chain Collaboration (e.g. CPFR)
Asset MaintAsset Mainteennaance & Managementnce & Management
Order FulfilmentOrder Fulfilment
PLM
SCM
Collaborative Project ManagementCollaborative Project Management
Procurement (Direct / Strategic)Procurement (Direct / Strategic)
Sourcing & RFx Services (Direct / Strategic)Sourcing & RFx Services (Direct / Strategic)
Procurement (Indirect / Non-strategic)Procurement (Indirect / Non-strategic)
Sourcing & RFx/Auctions (Non-strategic)Sourcing & RFx/Auctions (Non-strategic)
SRM
CollaborativeBusiness
Applications
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 13
Current Sweet Spots of e-Marketplaces
Content & DataManagement
Source: PwC Research and Ascet, 2002.
PublicPublic PrivatePrivate
Horizontal Horizontal e-MPe-MP
Vertical Vertical e-MPe-MP
PrivatePrivateExchangeExchange
Service Catagories
IT Integration
Community Content & Industry RegistryCommunity Content & Industry Registry
Customer Service and SupportCustomer Service and Support
Catalogs & Content Services (Non-strategic)Catalogs & Content Services (Non-strategic)
Catalogs & Content Services (Strategic)Catalogs & Content Services (Strategic)
eAnalytics (Performance Monitoring+Reporting)eAnalytics (Performance Monitoring+Reporting)
ContentMgmt
CRMBI
B2B Transactional Integration/Mapping ServicesB2B Transactional Integration/Mapping Services
B2B Document Routing & Security ServicesB2B Document Routing & Security Services
B2B EDI VAN Replacement & Registry ServicesB2B EDI VAN Replacement & Registry Services
Middle-ware
Settlement, Payment & ClearinghouseSettlement, Payment & Clearinghouse
Logistics & Transportation ServicesLogistics & Transportation Services
Supply Chain Event ManagementSupply Chain Event Management SCEMLogistics
Financials
Collaborative Design & EngineeringCollaborative Design & Engineering
Supply Chain Collaboration (e.g. CPFR)Supply Chain Collaboration (e.g. CPFR)
Asset MaintAsset Mainteennaance & Managementnce & Management
Order FulfilmentOrder Fulfilment
PLM
SCM
Collaborative Project ManagementCollaborative Project Management
Procurement (Direct / Strategic)Procurement (Direct / Strategic)
Sourcing & RFx Services (Direct / Strategic)Sourcing & RFx Services (Direct / Strategic)
Procurement (Indirect / Non-strategic)Procurement (Indirect / Non-strategic)
Sourcing & RFx/Auctions (Non-strategic)Sourcing & RFx/Auctions (Non-strategic)
SRM
CollaborativeBusiness
Applications
Process& Opera-
tionsStandard-
ization
ProcessStandardization& Optimization
ContentStandardization& Aggregation
ConnectivityStandardization
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 14
Interoperability Between e-Marketplaces and Private Exchanges is Generating Business
Nature of Service
Complexity of Ecosystem
(External business partner relationships, product structure, corporation structure)
low highStandardized
Unique
(Scope, connectivity,
complexity, cross-industry,
strategic importance) PrivatePrivatePrivatePrivate
Shell
PrivatePrivatePrivatePrivate
eAEC
PublicPublicPublicPublic
Shared Services/ Technical platform
Supplier Gateway/Content Management Services
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 15
eAECglobal – Private Areas on a Public Platform
Public Exchange Public Exchange
(AECglobal’s Procira)(AECglobal’s Procira)
Public Exchange Public Exchange
(AECglobal’s Procira)(AECglobal’s Procira)
eProcurement & eProcurement & Collaborative Projects: Collaborative Projects:
MulticompanyMulticompany ExchangeExchange
eProcurement & eProcurement & Collaborative Projects: Collaborative Projects:
MulticompanyMulticompany ExchangeExchange
Supplier Portals Supplier Portals Supplier Portals Supplier Portals
eProcurement & Collaborative eProcurement & Collaborative Project Project Private ExchangePrivate Exchange
eProcurement & Collaborative eProcurement & Collaborative Project Project Private ExchangePrivate ExchangeeProcurement & Collaborative eProcurement & Collaborative
Projects: Projects: Private ExchangesPrivate ExchangeseProcurement & Collaborative eProcurement & Collaborative
Projects: Projects: Private ExchangesPrivate Exchanges
Skanska
Hochtief
SubcontractorSupplier
Supplier
SupplierSupplier
„Shared Applications“
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 16
Shell – Enabling a Complex Coorporation to Transact High Volumes on an e-Marketplace
Supplier B Supplier C
Operating
Unit 2
Supplier x
Operating
Unit 1
MarketSet
Supplier A
Operating
Unit n
TradeRanger
Shell Private
Exchange
EBP
Operating
Unit 3
5 business areas
> 130 countries
> 90.000 employees
>1000 suppliers worldwide
EBPEBPEBP
Non-
SAP
...
Objectives
–Reduction of content management cost–Industry-wide content standardization–Supplier connectivity
–Global spend visibility–Process integration with back-end systems–Harmonization of material and supplier master data
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 17
Future Sweet Spots of e-MarketplacesPublicPublic PrivatePrivate
Horizontal Horizontal e-MPe-MP
Vertical Vertical e-MPe-MP
PrivatePrivateExchangeExchange
<<<<
Process& Opera-
tionsStandard-
ization
ContentStandardization& Aggregation
+ More processes become standardized- Strong competition by hosting and outsourcing providers
ProcessStandardization& Optimization
ConnectivityStandardization
ContentMgmt
CRM
BI
Middle-ware
SCEMLogistics
Financials
PLM
SCM
SRM
Web Services technology eases integrationof e-Marketplace services into corporateprocesses and drives standardization
+ Content standardization, aggregation, distribution, and maintenance are key- Suppliers self-manage their catalogs
Web Service technology reduces cost ofB2B connectivity; e-Marketplaces offermapping services and process consulting
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 18
Agenda
The Evolution of B2B Networks
E-Marketplaces @ SAP
Software Provisioning vs. Service Provisioning
Summary
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 19
The Standard Software Model (1)
• License revenues are the health indicator of a sw vendor– Mirror the actual value of the SW (flat fee + usage fee)– Have to refund initial CODev and cover COS– Revenue and cost not proportional (one time development cost;
neglectable production cost; the higher and more tangible the value, the lower the COS)
– Drive multiple follow-on revenues (maintenance, ProServ)
• Maintenance rev provide a predictable recurring rev stream– Follow license revenue pattern with delay– Balance out seasonal und economic rev variation– Retain value of sold software– Have to cover cost of support and further development
To Unterstand this modelis crucial for every e-MP doingbusiness with a std sw vendor!
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 20
The Standard Software Model (2)
• ProServ provisioning mandatory for vendor– Assure quality of implementation and customer satisfaction
– Unlock value of SW and drive usage revenues as well as up- and cross-sales
– Revenues proportional to cost
• COS have to follow deal size– Direct sales to „Fortune 10,000“
– Channel sales to SMB via partners who cross-sell complemen-tary (!) products & services
• Market potential has to justify initial investment!
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 21
Future Sweet Spots of Std SW VendorsPublicPublic PrivatePrivate
Horizontal Horizontal e-MPe-MP
Vertical Vertical e-MPe-MP
PrivatePrivateExchangeExchange
<<<<
ContentMgmt
CRM
BI
Middle-ware
SCEMLogistics
Financials
PLM
SCM
SRM
Content tools and core exchange technologywill be suitable for e-Marketplaces as well ascorporate customers; market for preintegra-ted generic mp-specific services and contentdepends on # of remaining mps
EAI / B2B IntegrationPlatform
Collabora-tive
applica-tions
&tools
E-Market-place
specificservices
Content Management &Data Warehousing tools
Low number of surviving e-Marketplacesand revenue potential only in some caseswill match the business model requirementsof large standard sw vendors
Revenue potential for behind-firewallsolutions much bigger due to strategicnature of solutions (value) and # sellablecopies; several applications and tools willbe deployable on e-Marketplaces as well
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 22
E-Marketplaces are Responsible for their Solutions – No Software Vendor can be!• There will be no out-of-the-box marketplace solution
– Select a reliable vendor for platform services– Select a strategic vendor for application services and tools to keep
integration cost low, but do not expect extra flexibility and focus from this vendor
– Shop, customize, or build missing functionality, but watch TCO and ROI carefully
• e-Marketplaces need technology and integration expertise – to blueprint the solution required to do business– to select vendors and consultants– to oversee implementation and operate/maintain the solution,
but must not become tech shops!
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 23
Coll. Apps Suited for e-MP Deployment• SRM: Central Supplier Directory
– Self-service registration of suppliers and assignment to product catagories; questionnaire-based search functionality
– Consolidated view on corporate-wide supply base– Extended and monitored supplier community through mp-deployment
• PLM: Project Collaboration– Project, document & folder management– Communication channel consolidation and better project controlling– “Pay by project” cost advantage through mp deployment
• SCM: Collaborative Inventory Management– Visualization of inventory status– Reduced inventory stock (manufact.) resp. out-of-stock rate (CPG)– Complete view (all materials, all suppliers, all customers) through mp
deployment
For solution detailsplease see appendix
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 24
Relationships between SW Vendors and e-Marketplaces are Manifold • Supplier-customer relationship
– E-Marketplace buys solutions of sw vendor; operationsof this sw has no adverse affect on other business of sw vendor (e.g., platform technology, content tools like Central Supplier Dir.)
• E-Marketplaces as partner for value-added services– E-Marketplace complements „on-ramp“ solutions of
the sw vendor and gets access to his customer base (e.g., connectivity services, industry content)
• E-Marketplace as channel partner– E-Marketplace resells sw solutions into its community
(e.g., on-ramps for SMB like SAP BusinessOne)– E-Marketplace offers solutions of the sw vendor as ASP (e.g.,
Project Collaboration, Coll. Inventory Mgmt., eProc.)
Uncritical
No competition
elsewhere!Needs synchronized
sales strategy and ops
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 25
ASP Partnerships Require Alignment of Business Cases, Trust, and „Creativity“• Careful segmentation of the target market to avoid channel
conflicts• End-customer buys sw license from sw vendor and can
freely chose whether to access a hosted version on a MP (for add‘l service fee) or a Private Exchange deployment
• Differentiation between a lightweight version for e-Marketplace ASP (less integration, less functionality) and a full-fledged version for Private Exchange deployment
• Solution hosted on e-Marketplace is only used temporarily until inhouse impl. is ready in order to reach a quicker ROI
• ...
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 26
Agenda
Evolution of B2B Networks
E-Marketplaces @ SAP
Software Provisioning vs. Service Provisioning
Summary
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 27
Summary – SAP stays committed!• e-Marketplaces will play a significant role in the
ecosystem and therefore also in the business strategy of SAP customers
• SAP remains a committed software partner for e-Marketplaces and will provide new services, but cannot take full responsibility for the technical evolution of a marketplace
• SAP is open to discuss all kinds of business partnerships• SAP has established a separate Business Unit responsible
for SAP‘s worldwide marketplace acitivites and central point of contact
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 28
Questions?
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 29
Appendix
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 30
SAP Central Supplier Directory (SRM) – Selected Features• Supplier
– self-service functionality for registrationand data maintenance
– Flexible introduction of new supplier attributes– Supplier relationships
• Products– Assignment of suppliers to product categories– Questionnaires by category
• Buyer– Private data areas for buying organizations
to capture specific supplier information– Advanced search functionalities by
questionnaires– Supplier evaluation based on questionnaires
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 31
SAP Central Supplier Directory (SRM) – Value Proposition• If deployed on a Private Exchange
– Consolidated view on corporate supply base
– Process improvements• Supplier evaluation and selection (e.g., RFI)
• Spend and performance analysis
• Supplier monitoring
• Supplier data maintenance through self-service
• If deployed on a Public Marketplace (in addition)– Access to worldwide supplier information
– Ongoing monitoring of the supplier market
– Sales tool for suppliers
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 32
SAP Project Collaboration (PLM) – Selected Features• Overall Project Modelling
– Virtual teams– Role-based authorization concept – Definition of communication channels– Tracking and archiving of user contributions– Notification mechanisms for users
• Document and Folder Management – Versioning– Hierarchical structures/multiple views– Various content types (documents, discussions,
data sheets, bookmarks, notes)– User-dependent definition of folder areas– Markup and Redlining
• WebEX integration
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 33
SAP Project Collaboration (PLM) – Value Proposition• If deployed on a Private Exchange
– Consolidated communication channels
– Process improvements• Well-defined roles and communication mechanisms
• Consistent and traceable access and exchange of documents
• Project progress controlling
• If deployed on a Public Marketplace (in addition)– Operational cost advantages through ASP („Pay per project“)
– No upfront investments and immediate benefits (faster ROI)
– Neutral administrator of cross-company projects
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 34
SAP Coll. Inventory Mgmt (SCM) –Selected Features• Visualization of inventory status and predefined industry-
standard replenishment processes– Enterprise-internal inventory visibility– Supplier Managed Inventory (SMI) in
discrete industries– Visibility into inventories of contract
manufacturers (High-Tech and Automotive)– Visibility into distribution centers (all industries)– Distributors offering visibility to their
customers (Service)
• Customizable alerts– Depending on quantity, percentages, or trends– Multiple delivery methods (e-mail, pager, WSDL)
• ASN responds from suppliers via browser or Web Service
Benutzername: testuser SupplyOn Lieferantenanbindung
Sortierung nach Sachnummer/Dispositionstyp/Status
0815 Min 150 Demand vom Max 600 Letze Lagerbew.:
in inspection = 0 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 24 1 8 Okt Nov DezStock = 450 Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep SepDemand 75 90 100 80 60 110 90 60 85 125 90 70 110 80 100 420 380 370 620 1580 1700in transit 150
calc. Stock 375 285 185 105 195 85 -5 -65 250 125 35 -35 -145 -225 -325 -745 -1125 -1495 -2115 -3695 -5395planned Shipments 400min Proposal 65 155 215 0 25 115 185 295 375 475 895 1275 1645 2265 3845 5545max Proposal 225 315 415 495 405 515 605 665 750 475 565 635 745 825 925 1345 1725 2095 2715 4295 5995
450
01. Sep 0230. Aug 02
[Order Monitor] [ Organisation: Buyer xyz] Sachnr. 0815 VMI Detail Monitor
Sachnr. VMI - Detail
[ Planfunktion ] [ Zeitskala ] [ Alerts ]
Benutzername: testuser SupplyOn Lieferantenanbindung
Order Monitor
Sortierung nach Sachnr.
Sachnr. Status
[Sortierung nach Supply-Trigger]
JKL23 D
XV20 C
DC10 K
WI8 C
Q39 V300 600
270 470
300 600
270 470
300 600
270 470
10/09
25/09
15/1010/09
25/09
15/10
02/10
05/10
02/10
05/10
1040
5 10 10 15
1040
5 10 10 15
10/09 25/09 05/10 12/10 15/10
SupplyTrigger
Screen Set
Generatoren
OrgansationBuyer
WerkBuyer
Bosch FeW
Bosch AnW
Conti Ffm
INA HZGA
ZF W4711
(SELLER SICHT)
SAP AG 2002, GTWA Stockholm, Dr. Bernd-Uwe Pagel 35
SAP Coll. Inventory Mgmt (SCM) – Value Proposition• If deployed on a Private Exchange
– Reduced stock (discrete industries)• Reduced capital consumption risk• Reduced capital cost• Reduced inventory cost
– Increased accuracy of production schedules and steady utilization (less overtime) on supplier side
– Reduced out-of-stock rate (CPG/Retail)
• If deployed on a Public Marketplace (in addition)– Minimized connectivity cost through hub concept– Availability of consolidated data about all inventory-managed
commodities of the participants– Additional services to provide complete and personalized views for the
individual agent (by commodity, by supplier, by customer)