New E-Business Models require new E-Business Software and business application architectures

News categories: New Economy financial management, digitizing the New Economy enterprise / Information Technology

SAP announced last week an extended version of its mySAP Financials solution to enable organizations and financial professionals to better manage the challenges of the E-Business revolution in finance. The new version of mySAP Financials will support both Financial and Value-Based Management in the New Economy (see white paper).

Because the highly dynamic New Economy requires highly flexible business systems to enable the organization to react to market changes fast with new business models which gives it an advance in the market, companies are looking for new business applications which are flexible enough in configuration, but which feature also a high degree of interoperability to be linked with other internal systems or those of business partners.

For example systems to support an e-commerce shop have to integrate supply chain management (SCM) processes with customer relation management (CRM) processes as well as with financial processes. In combining for example CRM and SCM functions with financial functions you will be able to offer online customers not only the product itself but also financial services. If you decide today to include financial services in your customer offering, you better be fast by integrating this functions into your online store before the competition is doing it. And this requires a high degree in flexibility and openness of software modules. mySAP Financials will offer this component based openness according to the announcement.

The integration will be thus not be achieved through a heavy backend ERP system, but through much lighter functional components which can talk to each other directly and to other applications from other vendors than SAP or to home-grown systems through open interfaces and standard protocols – probably based on XML or XBRL (about XBRL see my news from July 27, 2000).

This will allow users to deploy new software application components such as for electronic bill presentment, payment (EBPP) and settlement, or a new general ledger and cost accounting backend engine as well as analytic applications for strategy and business performance management, strategic stakeholder communication, business analytics for financial management, human resource management, supply chain management, customer relationship management and product lifecycle management – which all are part of the new SAP offering – step-by-step when needed without changing the existing landscape of ERP and legacy systems. This is especially good news for SAP R/3 customers, because that protects R/3 investments by making it part of the future and potentially allows new functionality to supplant R/3 in a phased way that does not require a big-bang replacement. This will also allow users to outsource specific functions (like AP and AR) while preserving the integrity of the financial picture.

The new mySAP Financials solutions is offering a comprehensive infrastructure for managing financial operations such as payment and settlement and financing (last also through innovative payment and financing models such as Orbian), accounting, and analytic applications by splitting these different areas of financial software applications into components (= and providing flexibility) and integrating them at the same time with each other and with other systems through open standards based interfaces (= enabling collaborative business processes). According to software market analysts it is likely that such an infrastructure model could become a new standard scheme for large business systems.

Beside that infrastructure topic, SAP also announced new analytic applications to support value based management in the New Economy, which is – compared to the old economy – not based any more on tangible but on intangible assets. For this last topic – value based management based on intangible assets - also see my presentation at the SAP Business Intelligence Conference in Hamburg, Germany, from November 28-30: “Value Based Management for the New Economy”.

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