Bob Baker: 0:03

You can push your transactions into the network. And if we do our jobs right in the industry, what you'll see is technologies like blockchain, like artificial intelligence will automate that it will create multiple transaction sets. It will ease your life, and it will ease your business life because all of the people that you need to interact with on the other side of those transactions will be speaking through that network as well

Tom Raftery: 0:31

Good morning, good afternoon, or good evening, wherever you are in the world. This is the digital supply chain podcast. The number one podcast, focusing on the digitization of supply chain. And I'm your host global vice-president at SAP Tom Raftery. Hi everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery with SAP and with me on the show today, I have my special guest Bob. Bob, welcome to the podcast. Would you like to introduce yourself?

Bob Baker: 0:58

Yeah, thank you very much, Tom. It's a delightful to be here, a real honor to meet you and to reach your audience today. My name is Bob Baker. I work in our product team within the SAP Business Network and I manage two functions for our chief product officer Paige Cox. The first is that I own what we call product success. And this is the function that drives product utilization and consumption through our customers, through a non-revenue lens as anybody that knows SAP knows, we have lots of people that worry about revenue and selling and implementing our products. We take a little bit of a different view here. We make sure that our satisfaction with our products is high and we try to drive growth of that utilization and consumption of our products. And so we call that product success within SAP and I manage that function. And then the other function is our ecosystem and our strategic ecosystem and how we think about a marketplace of partners that can deliver value added services to our networked, customers. I'd love to talk to you about some of that today.

Tom Raftery: 2:01

Sure. Sure. Sure. So for people who might be unaware, could you maybe start off telling me what's an SAP Businesses Network?

Bob Baker: 2:09

Yeah, it's a fascinating topic. And it's one that I think is becoming a very large strategic bet for SAP. When you think about networks, you might think about if you're a consumer, you might think about a visa network, for example, which is of course the large credit card, network or a MasterCard network or an American express network. These are point to point networks. They connect or they enable a consumer to utilize a credit card to buy something at a retail shop. And that retail shop connects to the Visa network to validate that transaction and to get paid faster than they would normally get paid if the customer wanted say credit terms or something like that, and it's become ubiquitous right in the consumer world. Everybody has a credit card. Everybody's familiar with the Visa logo and that's a network. In B2B it's less obvious. But it is becoming an incredibly important part, not only of business's daily lives, but of consumers daily lives as well. In the concept of business to business and supply chain, it's about this point to point interaction about buying things, moving things and managing those things in a collaborative way. For example, maybe a large consumer products company might need to buy paper pulp in order to manufacturer paper products like paper towels or toilet paper or hygiene products or things like that. In order to procure that paper pulp, they have to go to the manufacturer of a paper pulp, somebody who cuts down trees and turns that into that renewable resource called paper pulp, and then they have to move that paper pulp from that manufacturer into their own manufacturing facilities, they have to create the products and then those products have to roll out themselves on trucks or ships or air containers. And then they have to land at say a retailer, maybe a Walmart or Total in Europe or some small shop in Vietnam or in Southeast Asia. All of those products have to get there in some way or another and networks enable that experience. They allow manufacturers and suppliers and carriers, or as we would call them trading partners to actually conduct those transactions in near real time and in a highly collaborative way. When you think about networks you think of this multi-enterprise, IE companies talking to one another. You think of a multi transaction IE companies actually creating purchase orders and goods receipts at goods movements and shipping notifications and everything from procurement, all the way to supply chain management. All of those transactions that might occur invoicing is another one that I forgot to mention, but is incredibly important. All of that is multi enterprise, multi transaction supply chain networks. And it's a growing field. It's one that I think SAP is uniquely poised to win. And we have combined a number of our existing point to point transactional systems, a procurement network, a logistics network, and an asset management network into one new product that we call the SAP business network.

Tom Raftery: 5:30

So Bob, tease it out for me. Why is the network, why is it such a big advantage over the traditional way of doing business?

Bob Baker: 5:39

There are a number of reasons why a digital network is going to be better than, a traditional way of doing business. When you think about the way all of us have grown up doing business really. You think about just starting with procurement. Just buying things, whether those are things that you need to run your business like pens and paper and laptops and networking gear, and all of the things that go into enabling your business or the things that actually go into the things that you might manufacture and ultimately sell, whether those are in fact people in some cases with labor systems or whether it's advertising or whether it's travel or that paper pulp example that I mentioned earlier. Those are products and services that go into the things that ultimately all of us sell to make money in our businesses. And when you think about the traditional way of managing those businesses, it's a lot of paper. And the phone calls and Teams calls and collaboration in not real time, right? But the world has moved into a digital economy and it's more and more true that we are in or connected. And we see this in our own lives, right? The last several years we've kind of swung from one supply chain crisis to another around the world. You see how the world is just incredibly interconnected. So when a plant that is located in a location that is locked down because of a global pandemic. If that plant is one of the very few that produces that specific material, then you feel the shockwaves worldwide. And you saw that initially in the COVID pandemic when it was at least here in North America, it was strangely really difficult to get toilet paper. And that has just rippled through the economy now in the form of a semiconductor shortage. That of course impacts almost everything in our daily lives from a purchasing new automobiles and it changes price points, it changes everything. And this is the digital network that we live in today. It's incredibly impactful. It happens so fast that in a traditional network or a traditional way of doing business, it may have taken months to see those ripples. Now it takes literally weeks. If a ship gets stuck in the Suez Canal, the material on that ship can't reach it's port. It blocks other ships. That material can't reach their ports and consumers feel that worldwide. And so that's the world we live in. It's why networks are so incredibly important because when you think about blockages, like what we've seen in the last several years, or these shockwaves that run through the supply chain that you've seen for the last several years, those are going to continue. We're going to continue to see where you have disruptions like global pandemics or war, for example or climate interventions or disasters, which might prevent goods and services from being moved around the world. And the world desperately needs the ability to look for alternative sources of supply. In digital supply chains you need to find other companies or other prospects that maybe were not in your network as a buyer and a mover of these goods and services. You're going to need to find other ways and other sources of supply so that you can keep the supply chains moving, or you're going to need to reroute your goods and services to other docs or other points of location that can be accessible in times of crisis. So, the world needs flexibility in its supply chains. And networks are here to provide that flexibility.

Tom Raftery: 9:29

So, Bob, is that what people mean when they talk about the network economy?

Bob Baker: 10:06

Yeah, I think it is Tom. The global economy is interconnected. And when we say interconnected we really do mean in this day and age, we mean digitally connected and we mean networked. That allows us to transition into maybe the state of networks and the state of the markets and the products that are available. When you talk about networks today, much like that Visa example that we mentioned earlier in B2B software business to business software, networks typically are what we would refer to as a single tier network or a one tier network. And those networks today allow for one business to communicate to another business on a single set of transactions. Now that interaction might be many to many. For example, there may be many businesses that talk to many businesses, but the transaction set is very singular. The view of the business and the view of the network is also very singular; it's on a specific topic. So the transaction set for example, might be about procurement and it might go from company A to company B interacting on a single plane. If you will P L A N E, plane, and you can see that the company A wants to buy goods from company B, they send a purchase order to company B. Company B receives the purchase order. They tell company A that they've received the purchase order . Via receipt notification, company B prepares the goods and they tell company a that the goods are coming. And company A says, okay, please send them, put them here if you can. And company B sends the goods, but you don't really have visibility into that because this is a procurement network. It's not a supply chain network so much. And then eventually company B sends an invoice and eventually company A pays it. And that's a very singular plane. And it's a very simple view of commerce. It's a very simple network view. Where we see the market moving is into a much more complex map of how transactions actually occur in the real world. And if you think about exploding the example that I just gave, it's not a single plane. What actually happens is goods are requested. And once they're requested a whole series of transactions actually give are birthed if you will. Maybe in some system that company B is running, you have logistics processes, you have processes where you actually have to move the goods or create the goods, planning, manufacturing planning can sometimes can be taken into account. When you need to move the goods, you need transactions with a shipper. Typically people don't ship their own goods. They use a third party. So transactions must be sent to the third party. So you can see where the simple what might look like in a single tier network. A very simple transaction of'hey I'd like to buy something, here's a purchase order' actually explodes into a multi tier approach. And then when you layer on to that, not only are there multiple transaction types that occur because of a single transaction, a single purchase, order that gets kicked off buyers are themselves, they're also suppliers. They are not only buyers, they're suppliers. They're not only suppliers, they're also shippers. And so it's not just about multiple types of transactions. It's about multiple types of personas and effectively, we believe at SAP that the world is going to evolve into a mapped digital network commerce play that we think is going to be really the metaverse of digital transactions. It's kind of mapping the world's commerce and all of the complexity of that commerce into not just a single tier. It's not just a single plane. It's a three-dimensional universe. And we think that that's where the digital economy has headed in and collaboration and networked economy and the transactions between companies are going to get faster and they're going to get more real time. That's where we see the market heading today.

Tom Raftery: 14:39

And how do I manage that if I am a business out in the world today. How do I cope with that level of change, with that speed of transaction?

Bob Baker: 14:48

I mean, business is hard, right? It's never been easy if you're a large enterprise, even if you're a small enterprise you probably have multiple systems that you're running. You know, the world has tried to solve these problems before; these are not new challenges. It's just the world is bigger and more interconnected than ever. But, I remember the days when I was right out of university and it was a programming EDI transactions from one large consumer products company to retailers. so we have tried to solve these things and what we have found is that the existing solutions are very good solutions for singular use cases, whether that's procurement or logistics or asset control or travel or contingent labor, like they're singular in their view. And they do their jobs, but what they don't do is they don't take into account that interactivity and that integration from my systems to your systems. And that's where networks are going to come into play. They're going to remove the abstraction layer or they're going to create an abstraction so that you don't have to worry about what systems the other guy is running on the other side of your transaction set. You can push your transactions into the network. And if we do our jobs right in the industry, what you'll see is technologies like blockchain, like artificial intelligence will automate that it will create multiple transaction sets. It will ease your life, and it will ease your business life. Because all of the people that you need to interact with on the other side of those transactions will be speaking through that network as well. You will be abstracted from their complexity and you'll be able to extend your business processes into this digital framework. So if we do our jobs right in the industry, that's the outcome that we'll all achieve. We think there'll probably be several players in this market, but we only think a couple will really actually be able to deliver because this is a hard space and there is a lot of complexity. There's a lot of industry experience. There's a lot of transactional business, transactional experience that has to come into play. We think there are only a couple of companies that'll really be able to deliver the multi enterprise, multi transaction, n-tier network. They're going to be very few players in the market.

Tom Raftery: 17:10

Okay. And talk to me a bit about application marketplaces and how they fit in?

Bob Baker: 17:15

Yeah. So, if you think about company like at SAP, but could be one of SAP's competitors. For a long time we have all had application marketplaces. If you're a hyperscaler, you can go to their app stores, log in and see the applications that are available to you to run on those platforms. If you're a consumer, you can pick up your phone, your favorite platform, and it's probably either an iPhone or an Android platform. And you can see the app stores there. those are very very common today and everybody has an app store. What we see though for the network in particular is not every network provider is going to be able to deliver every possible scenario of value across the entire digital supply chain. The world is just way way too complex. And there's so much functional surface area to be delivered that there's not going to be one vendor to be able to do that. What we see is a world where you have these very complex supply chain and procurement networks that come together. And there are a series of services that because those transactions are flowing through those networks. These services or these apps will be able to connect, utilize that data and provide more value to the network. For example, supply chain finance is an important thing for procurement professionals worldwide. If you buy something you want to pay for it as late as you possibly can.

Tom Raftery: 18:51

Sure.

Bob Baker: 18:51

And if you sold something, you want to get paid for it as soon as you possibly can. And there are financial institutions that are happy to insert themselves and essentially perform arbitrage on those two sides of that coin. Imagine if you have a world where you are effectively mapping all of the transactions digitally for most of the world in your network. Then supply chain financing actually becomes a very straightforward thing because you see all of the procurement. You know the history. If you're a financial institution, you understand your credit risk in a way that you couldn't understand it with just scores and external information. You actually see the commerce happening in real time. And so supply chain finance is a great place that we see a value added service. Additionally location-based services, for example. We have a number of partners today that provide location services. For example, uh FarEye is one of SAP's partners. These are companies that actually know where your stuff is in the supply chain. If it's on that boat stuck in the Suez canal, or if it's on an aircraft or it's on a rail car or it's in a truck. They know where it is and they can tell you where it is in real time. And if you're a buyer. That's an incredibly useful thing. Because you'll know when it's going to show up at your dock and you know how to provide resources so that you can unload that shipment when it arrives. If you're a supplier, that's an incredibly useful thing because you know where your stuff is, you can tell your buyer and you can provide better service to your buyer as well. So these are two examples. Supply chain finance and location services. But I think there's an infinite variety. I think if they are with the data that is available on these digital networks, these multi enterprise, multi transactional networks, there will be a wealth of apps and services that we can make available into these networks via in-application marketplaces, where it will be easy for trading partners that conduct business on these networks to find, to provision and to buy these services and actually get them up and running very very quickly. So what we endeavor to do here at SAP is to create a network as a platform that will have the data that will enable. Of course SAP will build services. Of course we'll do that. We will build our own value added services and we'll monetize those services, of course. But we really intend to enable an entire ecosystem of partners that then we'll be able to reach the customers directly through our network and that's a little different than most I think of the app stores that are out there today. Because it's happening in the network, in real time, reaching your customers where they are if you're one of those partners. So we're excited about that possibility.

Tom Raftery: 21:56

Cool. Cool. Cool. We are coming towards the end of the podcast now, Bob. Is there any question I haven't asked you that you wish I had, or any aspect of this we haven't touched on that you think it's important for people to be aware of?

Bob Baker: 22:10

Yeah, Tom, I think if I could just be parochial to SAP just for a second, and I know your audience is broader and I don't necessarily want to sell them a bunch of stuff today, but I think examples are good and it helps people understand concretely what we mean. And so I think there are a couple of places that they can go. One is, if you're interested in learning more about what a network is and what this marketplace looks like, I encourage you to start with us here at SAP. There will be other competitors in the market. We think we're pretty good at it. And we think we're going to deliver something that really creates a new software category. But if you're interested, you can go to our website at sap.com/products/business-network. Take a look at our content there. Get to know this. I think if you're a procurement professional, if you're a supply chain professional, your world is already networked. I think you're going to see a marketplace, of software providers that they do a lot of what I just talked about. I think SAP will be at the forefront of that, but I encourage you to get educated about the market. And of course I would encourage you to get started with us. And then the other thing to look at is very concrete examples of partners that I mentioned like FarEye, for example. You can find those today at store.sap.com. That's our app store that's SAP's app store, but it'll give you a concrete view of specific examples. You can look at examples that connect to the network today for example, like FarEye, the other visibility providers in that channel. And you can see some of the things that I mentioned that are actually available to you today. Not in this future that I described, you can get started there.

Tom Raftery: 23:48

Super. Super. Bob if people want to know more about yourself or you mentioned where to go if they wanted to know more about the network economy but if they want to know more about yourself, where would you have me direct them?

Bob Baker: 24:01

Yeah, I would probably start with LinkedIn, a professional network, as a matter of fact. An excellent example of where this network concept comes into play. Start there. I'm up on LinkedIn at Bob Baker, it's easy to find me. I'm also on Twitter. I use an old nickname of mine from college Hoosier Zimbob. That's hard to spell it's H O O S I E R. Z I M B O B. I'm up on Twitter as well, but LinkedIn is a great place to start. We do post things up there and, I happy to collaborate and as always email to bob.baker@sap.com.

Tom Raftery: 24:33

Superb. And I put links to all those in the show notes, of the podcast. So people can find them pretty easily. Super, Bob. That's been really interesting. Thanks a million for coming on the podcast today.

Bob Baker: 24:43

Thank you, Tom. I appreciate the time.

Tom Raftery: 24:46

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about digital supply chains, head on over to sap.com/digital supply chain, or, or simply drop me an email to Tom dot Raftery @sap.com. If you like the show, please, don't forget to subscribe to it in your podcast application at choice to get new episodes, as soon as they are published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks, catch you all next time.