Claus Heinrich, executive board member of enterprise resource planning (ERP) and latterly e-business software giant SAP, speaks to Brian Tinham about the world’s largest business software provider’s aspirations for small to mid size manufacturers “What is important is to provide SMEs (small to mid size firms) with access to communities and partners.” So says Claus Heinrich, executive board member of the world’s largest enterprise resource planning (ERP) software provider SAP AG – a firm hitherto hardly noted for its interest in SMEs. But Heninrich, who is responsible for the whole of SAP’s manufacturing focus, including R/3 (now part of the mySAP.com initiative), says SMEs and their supply chains now represent a sizeable and growing slab of its business. And hence the concern. Hence also the ‘Ready to Run’ starter packs, industry-specific pre-configured templates and improved accelerated SAP (ASAP) implementation methodologies, all geared to making SAP more attractive to SMEs. “In the past only the very large companies could afford this,” he says, “with EDI,” noting the automotive sector’s considerable success. “But it’s very complex and expensive. With our Internet solution, everybody can communicate with other companies.” And indeed that is what mySAP.com is all about: the functionality of R/3 with SAP’s ‘New Dimension’ applications (advanced planning and optimisation (APO), etc) and, importantly, the Web portal with its services, content and infrastructure for connecting suppliers, partners and customers. Heninrich is convinced that this, more than anything, will help smaller companies. He should know. Because Heninrich understands manufacturing and business. Born in Waiblingen, near Stuttgart in Germany, in 1955, he studied management science at Mannheim University ???? and his doctorate was on advanced panning and scheduling, developing new algorithms for multi-level lot sizing. He went on to research and lecture on operations management at Cornell University’s Johnson School of Management, and joined SAP in 1987 with responsibility for MRP II development on R/2 and subsequently its successor R/3. Heinrich moved on to head up logistics information systems development, and then sales and operations planning software. He now holds the reins of power: in 1996 he joined the SAP board, and has assumed responsibility for all development of core R/3 as well as the supply chain management products like APO. He also runs SAP’s product lifecycle management, human resources and financials business units. Typical of so many men of influence in Germany, he knows his stuff and he’s quietly determined. Beneath the charming, urbane exterior, you glimpse a powerful intellect and a certainty that things will happen. Heinrich says mySAP.com’s Web connection will mean everything for SMEs – enabling for example trading exchanges, collaborative working and forecasting and dynamic supply chain management. And with more than one million registered mySAP.com users within one year of its launch, he may well be right. Particularly if, as he claims, it will also mean hosted applications and ASP (application service provision): Web-delivered software solutions with the ‘self-service’ style of single screen, multi-function desktop. Heinrich says it will support several ASP models: from hosted Internet, intranet and extranet access, to complete application hosting. He concedes that there are problems currently with this latter form of ASP: permanently on-line connection which modern manufacturing IT requires remains expensive. But, he insists, everyone needs to improve integration in the supply chain – and the prohibitive cost of software and infrastructure ownership, the difficulty of attracting and maintaining IT staff and all the rest, will fuel its eventual uptake. Heinrich notes “there are several flavours: ASP in the implementation phase is one example. We have to prove that our system can handle a customer’s processes. So our idea is pretty easy: why shouldn’t we host the implementation? Then the customer can decide ‘do I want to take responsibility for the hardware, the operating system and so on, or go to an ASP like EDS?’.” In Heinrich’s eyes, it’s all about “making it easier [for manufacturers] so they can focus on manufacturing and business – the technology will be handled by SAP specialists.” And as manufacturers are forced ever further away from make-to-stock, throughput and efficiency measures – and towards minimum cost, maximum agility supply chain based customer satisfaction – that’s valuable. But what about the fact that this is not yet a world dominated by SAP, so supply chains are replete with incompatible ERP systems? Heinrich says: “We are one of the most open in the world: there are BAPIs, lots of open application and standards groups – about 40 organisations.” Just as important, through mySAP.com there’s browser access and all that Web technologies can bring. Enter SAP Markets, the SAP offshoot that at last month’s US Sapphire event announced a tight alliance with e-procurement technology provider CommerceOne – despite, or perhaps because of, SAP’s claimed prowess in e-commerce. Heinrich says it’s the “dream team”, but adds “we clearly will work with others as well.” Sounds convincing? What happened to the old dinosaur? What about new ways like advanced planning and scheduling (APS)? Given that many of the ERP vendors whose focus has always been on manufacturing SMEs – like Symix and Mapics – are leading the APS charge with new technology aimed at replacing now outdated MRP II and making them more responsive, what’s SAP’s take? “APO,” says Heinrich. APO? Surely it’s way too complex for SME manufacturers? Look at the months and years APO implementers have spent on projects. “You know, there’s a difference between internal and external complexity,” retorts Heinrich. “My first VCR was very expensive and complicated – it had about 100 buttons and I was very proud of it. Now I have a new one which is much easier to use – but inside it’s even more complex. “The same applies to our software,” he says reassuringly. “It’s much easier to use than it was, even though it’s more complex inside. And it’s part of mySAP.com: so we can sell it to smaller users, even those with only four planners.”