Introduction
In order to understand SAP Supply Chain Management‘s (SCM) design, its important to understand the environment when it was first developed and released and how the environment changed as SCM was continually developed. This history below is seen through the lens of the author who began in SAP ERP, and then switched to i2 Technologies, before moving into SAP SCM several years later. It is an interesting story, which we have not seen documented elsewhere, and which also provides an insight into SCM in terms of its design and orientation. This history can, if internalized and analyzed, be used by companies to make informed decisions about future supply chain implementations.
SCM Origins
SCM (as Advanced Planning and Optimizer (APO)) was introduced at the height of the advanced planning trend back in 1998. This was a period where i2 Technologies was the number one advanced planning vendor, and Manugistics was close on its heels. Its hard to conceive of at this point because SAP SCM is so dominant in the advanced planning space, but SAP was not seen as a factor and was not predicted to become one. At one time i2 Technologies and SAP entered into a joint development relationship that SAP eventually broke off (the details of how and why are unknown to us), however, while the relationship never resulted in a product, it is clear from analyzing the early APO footprint that SAP was heavily influenced by their relationship with i2. What we can not say is how many of the ideas or methods from that partnership ended up in the APO product. However, because we worked at i2 we can provide an insight into i2‘s functionality and scope during the partnership.
APO’s i2 Influence
Planning engines need a lot of memory. The SAP SCM name for this memory area is called liveCache.
At the time i2 was very strong in factory planning and supply chain planning. They were known for memory resident engines that were able to plan and re-plan very quickly. Up until this point, planning systems would not pull the entire problem into memory, but would write back and forth between a database. I2’s contribution was to load the entire problem into memory, which was only possibly because of the hardware improvements in memory capacity and price. They were also one of the first companies to use the term “optimization“ in the supply chain space for its marketing literature, and also in promoting the benefits of supply chain optimization. The term optimization soon became a buzzword and highly desired functionality, even though many of the executives and their supporting managers at companies, as well as analysts, most likely did not understand the operations research based meaning of the term. i2’s early successes at companies such as Texas Instruments made industry sit up and take notice to take a look at this “advanced planning thing.“ Its hard to believe as I write this, but at one time i2 was actually viewed as a threat to SAP’s core ERP product. A number of analysts began disparaging SAP for not having an advanced planning suite. In hindsight this interpretation seems quite unfounded, as the two applications do different things. Even if i2 and Manugistics had continued to grow and SAP had never brought out APO, companies would still need SAP ERP because advanced planning applications do not actually process the recommendations. There was some discussion by arm chair theorists about getting rid of execution systems all together, but that was always a myth. Planning systems always need an execution system, like SAP ERP in order to do this. However, unfounded it was part of the psychology at the time, and most certainly influenced SAP’s decision to seek a partner in the advanced planning space. These vendors were bringing out functionality in supply chain that made SAP ERP seem staid at the time. In this way APO can be seen as a defensive product brought out to neutralize the momentum of vendors like i2 and Manugistics. From reading statements of SAP executives at the time, it seems that they were not particularly enthusiastic about developing APO and were probably perplexed that some customers were even interested in this functionality. While there is some overlap between the two, planning and execution systems are primarily complimentary.
The Early Versions
The earliest versions of APO impressed no one, and it almost certainly would not have survived if SAP had not given the product away for free at existing SAP ERP accounts. Furthermore, because SAP had always outsourced such a large percentage of its consulting to the large consulting companies, they were literally some of the first adopters of APO. It is estimated that in the early stages ¼ of all the APO installations were at consulting companies that had setup training systems.Thus APO had two strong selling points that the niche advanced planning vendors could not match, even while the functionality greatly lagged:
- Large consulting companies had the incentive to promote APO with their SAP ERP clients as they would get more of the consulting work. (the niche vendors never had the relationships or outsourced the same percentage of consulting to the major consulting companies)
- APO was integrated to SAP ERP (for details see chapter 9).
- SCM’s early incarnations featured five modules:
- DP
- SNP
- GATP
- PP/DS
- TP/VS
This solution design was limited to these modules as late as APO 4.1, although Internet Collaboration Hub (ICH) appeared for some time before 4.1, but never became a completely developed module until later releases.
