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SAP Transportation Management

SAP T&L: En route to market leadership

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A recent interview with Franz Hero for SAP News on the strategy and success of SAP transportation and logistics solutions.

Interviewee: Franz Hero, Head of Transportation and Logistics Development

Author: Charlotte Otter

Note: This interview has been adapted very slightly to enable external publishing.

Businesses that provide transportation and logistics are ripe for integrated solutions and SAP is the vendor with the most comprehensive offering. Franz Hero, chief product owner for SAP’s solutions in this segment, talks about challenges and opportunities.

SAP for Transportation & Logistics (T&L), a strategic segment of SAP’s industry portfolio, just finished an outstanding second quarter by adding over 50 new customers, and significant customer go-lives. T&L again doubled revenues against the same period last year and Q3 looks equally promising with a strong pipeline, important go-lives and delivery of the Supply Chain Execution Platform in August. A major milestone in the second quarter was also the new analyst ARC Advisory Group report that named SAP global leader in Transportation Management Systems.


To find out more about the product strategy behind this success, we spoke to T&L chief product owner, Franz Hero.

In June, SAP was named global leader in Transportation Management Systems by analysts ARC. Explain the development that led to this?


Franz Hero: A number of factors. Firstly, in 2009, SAP T&L started a new journey. We built a new strategy that would attack the market in this order:  First shipper industries (like manufacturing, retail), then the freight forwarders, followed by carriers – truck, rail, ocean and air. This strategy was aligned with our stakeholders, from development and solution management to sales and consulting, and we followed this roadmap consistently. Secondly, we have to give credit to the board and to our portfolio team who believed in us and who have supported us for the past three years. Thirdly, we have shown strong commitment to the market. Transportation & Logistics is a strategic investment area for SAP and we now have a comprehensive and robust solution for both the shipper and the freight forwarder industries. This success is demonstrated by freight forwarder giants, as well as supply chain management leaders which are implementing our solution.

What does the ARC statement mean for you now?

Franz Hero: It is a reconfirmation of our strategy, a strong message that we are successful and recognized as the leading software vendor for transportation management and a formidable challenger to best-of-breed solutions.  It also shows the strength of our internal alignment for roll-out and go-to-market activities, which is crucial. We are lucky that in each segment we have strong customer players that have been prepared to co-innovate with us. Having this kind of internal and external traction means that we can move on to the next stage in our roadmap, safe in the knowledge that we have both customers, the board and the field behind us.

How have you established such good relationships with your customers?

Franz Hero: We make sure we are closely involved with them. For our newest product, SAP Transportation Management, we have a customer office to oversee all our on-going customer projects, as well as development angels responsible for each customer. This ensures timely response to customer needs and that feedback we receive makes its way into the solution. That way, customers have an impact, they feel engaged, can give development direct input on their needs and feedback on the solution. We also have the TM Customer Network, which we kicked off in 2011. This brings together our closest TM customers to give them an insight into our development plans and engage them in workgroups for important topics.  They give us vital input before we start designing the next stage of the product, as well as feedback during UI and product reviews and validation. For example, we now have workgroups for the Transportation and Logistics Collaboration Portal, Fleet Management, Strategic Freight Procurement, Rail, Dock Appointment Scheduling and TM-EWM integration. These customers appreciate that we ask for their input and requirements before we start developing the product.

What about positioning? How does SAP T&L compete with other vendors?

Franz Hero: Logistics is a very fragmented market and the degree of standardization from a software perspective is very low as compared to manufacturing, for example.  I would say the market is about 15 years behind. Companies are now moving away from their legacy systems, so the market is taking off.  Our main competitive advantage is that there is no other vendor that can offer a global solution on the same scale for both warehousing and transportation management. Other vendors either do one or the other or are only strong in one solution. Deep integration is another competitive advantage. Because we are integrated into the ERP suite, with its business processes like Procure-to-Pay, Order-to-Cash, EH&S and Global Trade, we can offer a complete solution and support end-to-end processes. Our large SAP customer base and intrinsic cross-industry network is also compelling. Our customers are already preaching this for usHuge freight forwarder customers and their customer base also uses SAP software, so there is the opportunity for them to connect and collaborate on a common IT infrastructure.

    

SAP has a strong base traditionally in the shipper industry and the new transportation and warehousing logistics solutions are the natural extension for them. However, these solutions support core business for the freight forwarder and carrier market.

How does SAP T&L reflect SAP’s five market categories?

Franz Hero: Our main investments are extending the core with a supply chain execution platform for multiple industry segments. Yet the other strategy pillars are an integral part of this platform. We will deliver HANA accelerators for transportation planning, labor planning, warehouse optimization, track and trace, and so on. In terms of mobile, our main goal is to enable partners and customers to build their own mobile apps based on our infrastructure and we will continue to build standard mobile solutions for key areas. For example, today we have mobile solutions for all warehouse processes, event tracking and order tendering for transportation management, and we will build a carrier mobile solution for dock appointment scheduling. In terms of TCO, we have delivered five new RDSs and for sustainability, we help companies optimize their transportation and warehousing activities to reduce their carbon footprint. In SAP TM 9.0 we offer customers CO2-specific transportation reporting.

What are your milestones for the rest of 2012?

Franz Hero: We will release our Supply Chain Execution Platform covering Transportation Management 9.0 and Extended Warehouse Management 9.0 in August. Event Management 9.0 will follow in Q4. The TM 9.0 release is a major milestone - providing a comprehensive solution for the freight forwarder industry. We will also be kicking off development for the next SCE platform release - 9.1.

And in 2013?

Franz Hero: We will target the carrier market, specifically rail and truck companies. The SAP user group Rail has helped us define the solution for rail, and we are collaborating closely with leading companies with their own truck fleet. We will also continue to extend shipper and freight forwarder industry functionality in 2013, for example, with strategic freight procurement, parcel management, track and trace, and retail industry-specific developments. By 2014, when we reach out to the remaining carrier industry (ocean and air), we will have covered all the main supply chain execution areas, and offer all four segments a comprehensive logistics solution. Our mission is to be market leader – and we will achieve this step-by-step, by sticking to our roadmap, and with the ongoing support and buy-in from both our customers and our internal stakeholders.


TMS – Some facts and figures

  • US$ 1,100,000,000,000 – annual US transportation and logistics costs
  • 10% - the average GDP spend on logistics
  • US$ 1, 244.3 billion – total TMS business outlook in 2016
  • 10,3% - CAGR for TMS  through 2016
  • 5% - minimum logistic costs savings expected from SAP TM customer implementations
  • 120 – new SAP EWM customers in 2011
  • 150 – ongoing SAP EWM implementation projects
  • 50 – new SAP TM customers in 2011
  • 30 – ongoing SAP TM implementation projects

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