SAP Commodity Management Update
Last week, I was invited to SAP’s Commodity Management Forum 2015 in Heidelberg, Germany. It was a well-attended event with representatives of 15 customers, and 7 partner firms, as well as myself. There were also many familiar faces, now working for SAP Commodity Management, from the TRM software scene.
A presentation from Anja Strothkaemper, VP SAP Agribusiness and Commodity Management provided insights into SAP’s view of the market and its future strategy. Its three target areas are naturally the producers, converters and consumers of commodities, and it has entered the market mainly in metals and mining and on the consumer side in Ags and Softs. Overall, it covers origination, procurement, sales, warehousing, transportation, manufacturing, risk management and accounting with an analytical overlay. Of course, this is a combination of the specific Commodity Management solution and other SAP modules, but it is an entirely integrated solution.
SAP continues to build new functionality and the most recent addition is origination for agricultural contracts (SAP Agricultural Contract Management) specifically targeting the farming side of the business, i.e. origination. Again, this is fully integrated with risk management and other aspects of the overall solution. The plans for next year include a number of areas of either incremental functionality or new initiatives around areas such as trading for example. Against all the work the company is doing to expand its footprint, it is also innovating using other key SAP products such as the in memory HANA database and its digital business initiatives.
There were also several interesting customer presentations in areas such as Ags, Petroleum and Metals. What intrigued me was the customer’s commitment to what they see as a fully integrated ‘standard’ for the industry. While there will always be a segment of the market that doesn’t use SAP, the idea of a standard in Commodity Management is one that has long eluded everyone and you just do have a feeling that with the level of investment, commitment and huge client base, SAP has a shot at delivering a standard solution. The question however, is will it be an affordable one outside of the top tier? A hint of an answer to that question might be found in that one of the customers speaking that day was a middle tier company that ComTech would place in the packaged software market rather than the top tier of the market. Additionally, with cloud delivery, SAP can reach further down into the smaller scaled operations and still offer an affordable solution.
The message that I took away was clearly SAP is in this market and it sees huge potential in it too. It has already made large strides in developing required functionality – yes, it is still weaker in the traditional trading, position keeping and risk management areas of true trading but, that isn’t its initial target market anyway. Furthermore, you sense that it is simply a matter of time, investment and partners to help them get there. SAP plainly sees integration as its clear advantage over an ERP-CTRM type solution. Again, experience suggests that it may take time and investment to deliver the complete soup to nuts solution and one must anticipate issues along the way, but for ags & softs, metals and mining, and bulk energy products, SAP plainly sees itself as a force to be reckoned with.
For me, SAP has served notice in the space. It is here and it means business.
