Emergence of on demand solutions in the context of enterprise services

Emergence of on demand solutions
in the context of enterprise services
Thomas Wieberneit
Emergence of SaaS - Reasons
It was about time, because
 SaaS offers very low entry barriers for customers
SaaS offers very low exit 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
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
Complexity of Functionality
Window of Opportunity
Adapted from ‘The Innovators Dilemma’ by Clayton Christensen
What is an Enterprise Service
A service-oriented architecture is a collection of services that are
built following few principles:
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
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
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
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
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
Mission Critical
*Adapted from ‘Living on the Fault Line’ by Geoffrey Moore
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
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
ESA promises flexibility at low cost
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
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