Industry Cloud Ecosystem Insights: Powered by Partners, SAP's Industry Cloud's Successes Mount

SAP announced its Industry Cloud 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 famously robust 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.

This may look like another example of not letting a good crisis go to waste, and it was. But we still had to make it happen, and there were no guarantees.

Two-and-a-half 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 for SAP, our partners, and our customers.

The numbers support the verbiage: 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 $150 million in Industry Cloud offerings. Rather than “terrible twos,” Industry Cloud is enjoying “terrific twos,” you might say. The momentum shows no signs of slowing, and there are good reasons why for SAP, our partners, and, most importantly, our customers.

Industry focus

SAP launched a half century ago as an engineering-driven company focusing on automating core business processes. As the company grew, it expanded its reach into countless industry-specific areas. Today, our industry competence across vast realms of business and government is our key differentiator.?

Looking at the half century ahead, we believe that a cloud-based combination of core processes plus a dynamic and growing portfolio of industry-specific solutions will be critical to our customers’ success. They need to be able to adapt quickly as business needs evolve– and, just as importantly, to react nimbly to the sorts of future disruptions of which we’re now getting more than taste: wars, energy crises, supply chain problems, and climate change-driven disruptions among them.

More happily, our customers are rightly demanding speed 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.

Our partners are already central to this vision, and their role will only grow with time. While SAP is developing many of its own Industry Cloud solutions, we believe partners who live and breathe their industries will continue to develop the vast majority of the overall SAP Industry Cloud product portfolio.

The benefits to SAP are clear enough. But what’s in it for our partners?

Partner perspective

From the go-to-market perspective, 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 fast and efficient integration of cloud-based solutions via the Business Technology Platform into the SAP core, thereby letting partner solutions harness the formidable power of S/4HANA, which manifests through integration, extensibility, analytics, and one data model. 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 initiatives. These are comprehensive offerings encompassing industry reference architectures and business process models, industry templates and implementation accelerators, data models and preconfigured interfaces along with packaged industry innovations on SAP’s Business Technology Platform and SAP S/4HANA.??Each of these can include any number of individual Industry Cloud solutions that are then delivered as a broader offering.?

As an example, IBM’s Intelligent Cloud for industrial manufacturing includes four Industry Cloud workflow solutions, which could be sold individually on the SAP store. However, IBM, like other global strategic service partner and their customers, prefers to bundle them as a comprehensive, service-centric solution together with SAP solutions such as SAP S/4HANA.

Another pleasant surprise, perhaps, shouldn’t have been a surprise at all. When you create an ecosystem, unexpected relationships will develop. 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 who might otherwise not have the time, resources, or inclination to assemble point solutions on their own. Doing that right over time will take more than keeping track of an ever-evolving set of Industry Cloud offerings by so many vendors. Service providers and integrators must understand how they can best combine those solutions to suit the unique needs of various customers in each industry.?

Customers first

Speaking of customers, our experience so far is that they 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.

More broadly, SAP’s Industry Cloud is providing our customers with fresh impetus for cloud transformation. While S/4HANA enjoys increasing uptake, SAP and its partners’ quick-to-integrate, easy-to-use solutions for specialized industry verticals are powering new services, driving revenue, trimming costs, and improving customer experience. Those are proving to be compelling reasons for customers to make the leap to the cloud.?

SAP’s Industry Cloud yet again 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 enormous momentum of Industry Cloud. 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’s Industry Cloud Ecosystem program.