Navigating Composable ERP

⇨ Understand what taking a composable approach means from an SAP perspective.

⇨ Explore how to address challenges using a composable approach.

⇨ Learn how IBM and Microsoft are helping organizations implement composable ERP.

Many existing SAP ERP implementations consist of a single monolithic system which hosts all functionality within a single instance. However, organizations are often looking to add best of breed solutions that represent the right tool for the right technology which allows them to create simpler, smarter, and more connected intelligent landscapes that can redefine business processes and transform how they operate. These are capabilities a composable ERP environment can offer.

SAPinsider’s VP of Research, Robert Holland, spoke with Devraj Bardhan, CTO of SAP Managed Services at IBM to discuss the challenges facing organizations using single monolithic systems, the basics of composable ERP, and how customers can leverage a composable environment and address business challenges.

Defining Composable ERP

Composable ERP is a term that has been around for several years but has not always been applied to SAP ERP systems. At a high level, a composable ERP is an Enterprise Resource Planning system like SAP, made up of model components that can be combined and recombined to fit specific business needs. In today’s context, it means organizations using SAP S/4HANA for the ERP, but also using SAP SuccessFactors, and a combination of SAP Ariba and a third-party CRM tool to manage accounts and contracts. As some customers exclusively use SAP solutions for their business needs, they are looking for best of breed solutions that can be integrated into their SAP Ariba deployment seamlessly like CRM or contract management system.

As Bardhan says, “To me, composable ERP fits all the different core pieces of your business together. Not just SAP but your legacy applications, home grown applications, anything that needs to plug into SAP can be connected easily – composable ERP enables that to happen. It is about building an environment around your ERP system that best serves your needs with the best tools for each specific use case. It is not about having a Swiss Army knife which has twenty tools that may or may not work depending on what you know; it is about having the best tools to fit each specific need. And it is not just being the best tool, but the right tool for the right task.”

Composable ERP is an adaptive technology strategy that is used to build the foundation for modern ERP. It allows organizations to plug in components to the model rather than having to do everything at once. For example, a customer may implement SAP SuccessFactors first, then implement SAP Ariba network and do a procurement transformation. It is in the middle of that process they might move from SAP ECC to SAP S/4HANA, and it integrates perfectly. It is not necessary to move to SAP S/4HANA with a procurement update and HR all at the same time. Composable ERP makes it possible to do HR or procurement when the organization is ready, and move to SAP S/4HANA at a date that reduces disruption.

The goal of a composable ERP is to create an environment where changes can be made, and systems can be replaced without having to disrupt anything. Bardhan emphasizes, “The value is where IBM and Microsoft come together with SAP and build a solution that works for the customer in a way where SAP may not be leading. As a consulting company, IBM brings in the best of SAP, the best of Microsoft Azure, and the best of the client’s knowledge to build a platform that just works.”

Building a Foundation for Interconnectedness

While composable ERP brings together disparate systems and components in a way that allows them to work together as a platform, there are challenges to the approach. One of the biggest challenges is when multiple platforms need to be integrated and the approach needed for such an integration is unclear.

As Bardhan asserts, “The first step is to choose what will be the platform for integration. Is it SAP Integration Suite? Is it a streaming platform where something like SAP Advanced Event Mesh can be leveraged from SAP Business Technology Platform (BTP), or even Azure Event Mesh. The way I bring it together is to have two levels or rings of integration. The inner ring is all about SAP integration. This is about connecting SAP to SAP. The outer ring is non-SAP to non-SAP. But organizations must manage integration within and across those rings. Within the inner ring you might use SAP technology, but in the outer ring it is important to use a tool that is meant for third-party integration, such as one from Microsoft. But this is not a one size fits all approach. It is important to mix and merge with, for example, the Microsoft Azure BTP common reference architecture which uses the best of SAP BTP and Microsoft Azure to bring things together.”

The integration platform is crucial for building data lakes as it is necessary to have a common foundation layer. Organizations demand seamlessness, a feature of composable ERP environments, so that systems can exchange data and metadata while adhering to a uniform underlying grammar. The foundation of a composable environment is when the SAP to SAP and non-SAP to non-SAP layers are ready for the integration platform and data is ready with a common grammar. The end goal is to have a simpler, smarter, and connected environment, something that every organization needs.

Using Composable ERP in Today’s Environment

Most organizations do not have a simple CRM. There is a marketing CRM, a sales CRM, a service CRM, and often a different tool for the commerce platform. For example, some organizations combine Salesforce with SAP Customer Experience and SAP S/4HANA which becomes their composable ERP architecture. Some customers that Bardhan works with also use Microsoft Dynamics. But for all this to work, there must be proper governance of the middleware and API management that forms the integration layer. If implemented correctly, it is possible to use a combination of event streaming and API management to control data flows and organizations can move beyond point-to-point interfaces.

However, Bardhan emphasizes that dealing with existing or old interfaces can be a challenge, “A lot of customers moving to SAP S/4HANA forget that they have to take care of the interfaces at some point in time. This makes it important to look at the interfaces in coordination with the journey. People want to build using standard SAP functionality and keep the core clean so that they do not create the same monolithic structure that they had with their SAP ECC system. What they can do is leverage capabilities like SAP Industry Cloud built on a Microsoft Azure platform using SAP BTP and ensure that the application is composable. This is where the market is going. We build composable industry solutions using Microsoft Azure technology and IBM consulting to ensure those industry solutions are built in such a way that they can sit on top of SAP S/4HANA and communicate with the ecosystem in a very seamless manner.”

Co-Innovating to Help Customers

IBM has been Microsoft’s partner for many years, and much of the technology IBM uses runs on Microsoft platforms. As an organization, IBM’s focus is on what is best for the client. The best IBM technology, the best Microsoft technology, the best SAP technology, and bringing them all together through a common, integrated approach is the goal. Bardhan highlights that in the past, customers were either SAP or Oracle customers. Now they are defined by the cloud environments and service providers they use and the products they are running on top of it. Thus, in the case of a customer running Microsoft Azure and SAP, IBM looks at the ecosystem and advises what is a best fit for the customer.

“We do not come to the table with a technology match. We look to understand the business problem that the customer is trying to solve. For example, if they are trying to solve a specific challenge we come and show them how they can leverage different technologies to address that challenge. We come in with a business mindset, not a technology mindset. We are trying to bring technologies together to address business needs and provide value to the organization. It might reduce the workload on an overburdened team or streamline and accelerate processes,” says Bardhan.

IBM and Microsoft’s focus is prioritizing and delivering business value to organizations by integrating technologies to address business challenges while reducing costs. IBM utilizes Microsoft and SAP as tools to achieve this goal, benefiting both the company and its collaborating teams.