Industry clouds: a key ingredient for agility and business opportunity

The astonishing pace of change in the world today driven by extraordinary levels of technology innovation has been pushing business towards the cloud for years. The worldwide COVID-19 pandemic rapidly accelerated the adoption of cloud technology, as companies realised the need for agility and speed. Standardisation of commodity processes has been the new mantra in this world dominated by cloud technologies. However, to run their generic and standardised business applications like ERP or CRM, many industries still need specific enhancements, such as text verticalization or a specific chart of accounts. In addition to that, many processes are very industry specific and can help those companies differentiate in areas like customer experience, manufacturing, order fulfillment, warranty or returns management and many more. Highly regulated industries such as banking, healthcare or life science add additional requirements towards modern business applications.

On top of these factors, there are other external forces pushing businesses to adapt quickly, including challenges in supply chains which have become more and more visible to every customer and consumer, given ever-changing COVID-19 requirements and restrictions. 

With these company or industry-specific factors and external forces, businesses are looking for targeted cloud solutions which are designed with industry challenges in mind, enabling them to get ahead of their competition and deliver value more quickly. Such companies seek easy to adopt and flexible solutions to help them deliver on their business opportunities short-term and to speed up their digital transformation. Our digital interactions are becoming the norm and digital capabilities – like artificial intelligence and machine learning – become more and more critical to support resiliency and efficiency through automated, integrated processes. 

It is no secret that there is a large and growing potential for cloud software vendors that successfully manage to provide standardised offerings enhanced by tailored, industry-specific applications in this fast-paced and competitive environment. In particular, according to Deloitte, as much as 64 percent of the $1tn cloud market could benefit from industry clouds – a potential $640bn market. 

To make this more tangible, let’s take a look at retail – an industry in which the abundant access to data has shifted the power from the retailer to the consumer. This has put an increased pressure on retailers and brands to invest in innovative business models and new ways of doing business. Consumers are demanding new services such as kerbside pickup, a simplified return process, and expanded online options. However, they are also demanding faster delivery options, continuous communication, and availability, topped off by a sustainable business model. Successful retailers must meet all of these demands without sacrificing best-in-class service to cultivate customer loyalty. On top of that, retailers must now anticipate and prepare for supply chain disruption and vertical integration. This industry perfectly depicts the storm of opportunities and challenges that companies face and outlines why industry-specific and flexible cloud solutions are in high demand.

As one of the first companies to launch an innovative industry-focussed application platform for our customers and partners, SAP has always put a focus on the needs of industries. We spent a vast amount of time with our customers and partners to understand their changing industry requirements in the twenty-first century and how to best help them run value chains end-to-end, identify supply-and-demand issues, and provide the best software and technology to drive more vertical, industry-specific processes in the cloud. 

SAP’s Industry Cloud completely simplifies access to innovative vertical solutions across industries. It allows customers and partners to build and integrate cloud solutions with our business technology platform as the foundation. These solutions work with – and extend – our intelligent suite and business network solutions through a wide range of application programming interfaces. They work on a common data model, process model, and user experience. They are cost-effective and transformational solutions that meet the need of a standardised offering enhanced by tailored, industry-specific applications in an ever-changing world. 

Together with our partners – including traditional partners but also start-ups, universities, and others – we are creating solutions that complement and build on our deep expertise in end-to-end processes across industries.

Of course, no technology company can be all things to all companies while responding to the constantly changing needs of the market. That is why we believe the best industry-specific solutions are built together with customers and partners, using their industry-specific knowledge to drive innovation on an open platform. Together with our partners – including traditional partners but also start-ups, universities, and others – we are creating solutions that complement and build on our deep expertise in end-to-end processes across industries. This is how we’re able to provide the widest range of solutions available to support unique industry requirements with rapid deployment. 

Another example is how to manage trade claims. So far, customer products companies wasted time and effort manually settling retailer trade claims. This was plagued by errors and disputes, decreasing overall process efficiency. 

Now there is a solution built with the customer’s specific needs in mind. With the help of state-of-the-art software and using the functionality of machine learning, workflow productivity is enhanced and can  deliver real business value by automating manual tasks and reducing human error. Customers can see as much as a 50 percent reduction in cost per claim and more than 70 percent faster clearing of deductions. We continue to see that the industry cloud allows customers and partners to simplify and accelerate development by: 

• Developing rapidly and with agility in the cloud

• Focussing on building solutions that meet the specific needs of the industry 

• Benefitting from cloud services and reusing existing, well-tested functionality

As more and more cloud solutions are offered, businesses have to ensure that customers have a consistent look and feel, quality, and simple integration behaviour across all solutions. These industry solutions range from automotive, to consumer, to travel and leisure, to retail and telecommunications, driven by the demands of customers for industry-specific solutions. COVID-19, Brexit and global warming are just a few of the factors creating so much strain on supply chains today. But a business that cannot adapt and change at the speed of cloud will not survive. As we look at 2022 there is no indication that these pressures will subside and some – particularly the need for transparency and the need to build a sustainable intelligent enterprise – are likely to become even more pressing. That is why we are confident that industry cloud solutions will continue to reshape the business landscape in years to come, providing a holistic experience and tailored solutions to businesses and industries undergoing rapid change and exciting growth.   

Jan Gilg, president and chief product officer SAP S/4HANA.