SAP & InnoCentive

Jevon at Socialwrite recently wrote about SAP's partnership with InnoCentive. My my, how things have changed. It wasn't too long ago that I was sitting down with SAP and listening to their philosophy on business practices which was the furthest thing away from crowdsource thinking like InnoCentive.

SAP had traditionally been about "best practices". According to SAP, companies stand to gain from SAP's global customer base and taking what is context for others and making it core for them. For example, what large scale operation would "build" their own inventory management system or human resource management system instead of buying it? You would spend much more effort and dollars to accomplish only a fraction of what a company like SAP has already been able to do. In addition, you benefit from their global R&D and refinement of best practices.

To fully reap the value of leveraging pre-packaged best practices however often requires you to minimize customization. Over customization would diminish the value of having a set best-practice to start with. Hence companies that just adopt the SAP practices would tend to benefit from higher levels of efficiencies. Or so goes the philosophy...

As I've written previously, the challenge with this thinking is that it limits innovation. Sure, you could argue innovation only matters around what is "core" to your business. But that line of distinction can be a bit fuzzy, and strong delineation could mean missed opportunities of taking what was "context" and transforming into "core". For example, if your core was manufacturing PC's and distribution was really context for you, you may miss out on creating a competitive differentiator by drastically changing the distribution practices.

For me it's been quite interesting to see how SAP has been on a road to "re-inventing" itself. The focus on SOA & BPM over the last few years and this most recent partnership with InnoCentive to crowdsource innovation could be a sign of things to come for all enterprises. If the world's biggest enterprise software giant whose core is around best-practices is now crowdsourcing for new practices... What are the implications to your organization?

Or perhaps it's just hoopla and SAP may not really be all that serious around crowdsourcing and is just doing this for appearances. Jevon ends his post by quoting Mark Yolton, Senior VP of the SAP community network, “We will only be posting problems which are not core to our business”. I hope not. As Clay Shirky stated, the old thinking was to focus on 80% gain for 20% effort but the new thinking is, why give up that last 20% of gain? Thoughts?

SOA - D.O.A.?

Are you tired of hearing about Services Oriented Architecture aka SOA yet? Like anything that gets as hyped as SOA, the term is becoming less and less helpful. My biggest concern with SOA however is that it's often being driven by the technologically oriented... Why the term itself drips of techno-speak... The potential offered by SOA is much more than technology it's about agile business process on-demand.

What's wrong with the technical approach to SOA? Simply put, the problem weighs the advantages of organizational efficiency greater than that of organizational effectiveness. We view SOA as a means to reduce costs through re-usable services allowing for faster application development. To do this we look at infrastructure components such as hubs, protocols, standards, repositories, development practices, etc... Yes, reducing costs to the organization and being able develop applications faster are good outcomes but it's only one aspect and quite frankly only a short-term advantage.

As organizations drive efficiencies in their applications through SOA, standardization and re-usability, they reach a point where the innovation they originally heralded as breakthrough becomes replicated en masses. At this point, trying to maintain this innovativeness becomes hugely cost in-effective as other organizations, with the sole purpose of delivering a 'best practice' arise and start to accelerate R&D and drive efficiencies. Geofferey Moore talks about this as moving from core to context. and Clayton Christenson discusses the shift from 'disruptive' to 'sustainable'. In other words if your focus on SOA is about driving efficiencies, it will eventually be replicated and further advanced through organizations that will specialize on this. Google recently addressed this as well in their call to CIO's to outsource almost everything.

So if SOA drives efficiency but that is only a short-term advantage what more is there? The answer is that SOA isn't just about developing new apps faster. It's about providing a Process driven fluid application. It's the intersection of SOA and BPM that will result in a sustainable competitive advantage. It's not just about building applications focused around end-to-end processes but the acceptance that those processes are subject to change and re-change and re-change. They will change in response to the environment. They will change because the focus for SOA should be on innovation. "Best Practices" in end-to-end processes will be sure fire way to eventually become average!

If we start with Business Process though we design our services around the processes. Either building services or buying services or sharing services are all possibilities. The breakthrough happens around an organizations ability to then rapidly re-adapt it's processes when it sees fit. This means we are not constrained to slow and costly IT to have the business transform. Wrap this with tools designed to move away from code and go to modelling and you start to create a platform for business process. Using innovation specific to your organization (NOT the industry) will allow you to do something your competitors can not simply buy off the shelf.

This could have catastrophic implications to companies such as SAP that have had for years provided us with "best practices" through proprietary means. That's another blog, but I will leave it that SAP is transforming though to capitalize on the potential. IF they can make their vision work...

If we don't move away from SOA as a technology focus to SOA as the platform for BPM focus, the rewards will only be a fraction of the opportunity.