SAP announced its industry cloud initiative in June 2020 at the height of pandemic lockdowns. At a moment of crisis and constraint, we described a vision of freedom and collaboration. We spoke of an “open yet integrated innovation space for SAP, partners, and customers,” one that would let developers build their own cloud-based applications that could tap into SAP’s core process and data domains through open APIs. The idea was to let creative partners large and small develop industry-specific solutions above the waterline without having to brave the intelligent suite’s engine room.
Close to three years later, it’s now clear that SAP’s industry cloud was an idea whose time had come. It’s proving to be an enabling technology of surprising power and scope, and it has created more than just a niche. Industry cloud is proving to be an innovation ecosystem unto itself, one that’s already fostered hundreds of creative solutions to a wide spectrum of business problems. Through our collective embrace of what has proven to be a very powerful idea indeed, industry cloud is also driving profound change at SAP, its partners, and customers.
The numbers tell a compelling story: what started with a handful of partners in four industries now encompasses nearly 300 software partner solutions, with 150 more in the pipeline, across two dozen industries. In addition, our top global strategic service partners alone have invested on the order of US$150 million in industry cloud offerings. And the momentum shows no signs of slowing.
A cloud-based combination of core processes, plus a dynamic and growing portfolio of industry-specific solutions, will be critical to our customers’ success. Our customers are rightly demanding speed, modularity, and flexibility in supporting the rapid innovation they need to exploit new business opportunities, and they see that cloud-based ecosystems are the vehicle. IDC recently estimated that industry ecosystems such as SAP’s industry cloud will see a 40% faster innovation rate than those pursuing traditional innovation approaches.
While SAP is developing many of its own industry cloud solutions, we believe partners that live and breathe their industries ultimately will drive a large share of the overall industry cloud product portfolio.
Industry cloud opens the door to partners all over the world to avail the solutions embodying their expertise to SAP’s enormous installed base. From a technical perspective, industry cloud’s open APIs enable the integration of cloud-based solutions via SAP Business Technology Platform into the SAP core, thereby letting partner solutions tap into SAP S/4HANA. Plugging in at the periphery keeps the SAP core “clean,” sharply reducing the risk of unintended consequences and sparing the development and testing necessary to mitigate that risk. The result is a much faster innovation cycle.
Those are the sorts of benefits we anticipated when we launched industry cloud. But there have also been pleasant surprises. Our biggest partners – global strategic service partners such as Accenture, Capgemini, EY, IBM, Deloitte, InfoSys, Wipro, and more than a dozen others – have developed more than 40 end-to-end industry cloud solutions. These comprehensive offerings can include any number of individual industry cloud solutions that are then delivered as a broader offering.
Another pleasant surprise perhaps shouldn’t have been a surprise at all. When you create an ecosystem, unexpected relationships will develop. In particular, we are seeing major system integrators, local service partners, and resellers picking up on the solutions of niche industry cloud developers, vetting those solutions, and introducing them to customers that might otherwise not have the time, resources, or inclination to assemble point solutions on their own.
Our experience so far is that customers value industry cloud for many of the same reasons that our partners do – in particular, the speed and simplicity of development and integration and the filling of solution gaps by SAP partners steeped in their various industries. But some customers also recognize the industry cloud innovation layer as a sort of sandbox in which they can develop their own solutions and, in some cases, productize them for their industries. Customers have long been SAP software development partners, but industry cloud is catalyzing that dynamic.
SAP’s industry cloud demonstrates that if you offer up an environment in which smart, creative, and ambitious people and organizations with problems to solve can operate with state-of-the-art tools and wide latitude, good things happen. That’s manifesting in the momentum we’re witnessing today in the industry cloud initiative. While aspects of ours, our partners’, and our customers’ collective successes with industry cloud have been surprising, this was an idea whose time had clearly come.
Jan Schneider is vice president and co-lead of SAP Industry Ecosystem.